Facts about credit reporting agencies

You may never see one, or visit one, but the credit reporting agency is always there in the background. These are the companies that assign credit ratings for both corporations and individuals. The credit rating is a way of measuring credit worthiness-or in other terms, the ability to pay back a loan.

You may envision a remote room in an unknown place where individuals in lab coats collect and collate personal data on people. Actually, in the earliest days of credit reporting, this was exactly the case. The ratings were compiled by hand and banks could call and check on anyone they wanted verbally. In modern times, the data is sent in via magnetic tape reporting or secure data transfer and the only times humans really involved is when there is an inaccuracy on your credit report that needs to be investigated.

There are hundreds of extensions of the "Big Three" Experian (formerly TRW), Equifax and TransUnion that are located all across the country. Because the credit bureaus competitors and do not share information with one another, it is a good idea to check the Big Three regularly to ensure there are no errors or omissions on your personal credit report.

Thus, it becomes the responsibility of the individual to check up on the people that are checking up on everyone else. Changes in the statutes for credit reports now make it possible for everyone to get one free report from each of the three major credit bureaus per year.

Looking at your own credit report will give you valuable insight on how your history is being rated. It would also help to understand the laws that govern how these agencies are able to do business. Know your rights! As the old saying goes, "If you don't know your rights, you don't have any." There may be times that require you to challenge something inaccurate on your report. Since your credit report is the way many firms will "know" you, you want every item in it to be absolutely accurate.

You may think that you have a good credit report but a credit report that has something questionable contained within it may be the difference between getting that new credit card or auto loan and being denied. And if you're in the process of applying for credit without this knowledge, you can be turned down. This is why checking up on your personal credit report and going through the complaint or correction process if necessary is so important.

Since the credit reporting agency is the standard of how the world determines credit worthiness, make sure that any lenders or retailers you want to do business with are reporting to one of the major agencies and that information gives a one-hundred percent correct picture of how you handle your personal finances.